James Lyon was born on February 11, 1919, in Mt. Ranier, Maryland. He enlisted in the U.S. Navy on October 9, 1939, and completed basic training at NTS Norfolk, Virginia, in December 1939. His first assignment was as a fireman aboard the destroyer USS Roe (DD-418) from January 1940 to July 1941, followed by submarine school at Submarine Base New London, Connecticut, from August 1941 to February 1942. F1c Lyon joined the crew of the submarine USS Grunion (SS-216) during her fitting out in February 1942, and remained aboard after her commissioning in April 1942. He was killed in action aboard the Grunion during a confrontation with the armed Japanese freighter Kano Maru on July 30, 1942. On August 22, 2007, a search team organized by the three sons of CDR Mannert Abele (the Captain of the Grunion when she was sunk) used a remotely operated vehicle to find a sunken vessel 3,000 feet down in the Bering Sea north of Kiska Island at the tip of the Aleutian Islands. On October 1, 2008, the U.S. Navy announced that the sunken vessel is the World War II submarine USS Grunion (SS-216).

His Navy Commendation Medal Citation reads:

For meritorious conduct as a member of the crew of the U.S.S. GRUNION which destroyed three enemy destroyers while engaged in a war patrol in enemy controlled waters. Despite severe and persistent anti-submarine measures resulting from these three successful attacks, the GRUNION was brought safely through the counter attacks and continued an aggressive war patrol. As a member of the crew of the GRUNION, your performance of duty was an important and material contribution to the prosecution of this war.